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Pressing the Team Practice Advantage

Pressing the Team Practice Advantage

If I were Dr. Phil prescribing a treatment for advisor morale, it would be simple — commit yourself to becoming elite.

Warning! Elite wealth management teams continue to advance themselves ahead of solo advisors and teams in general. The Oechsli Institute recently completed a research project, “Insights into Wealth Management Teams,” which is a continuation of one of the most in-depth independent studies of teams in the industry.

Although there is no way to share all of our findings within the confines of my monthly column, I do want to share some of the key highlights. First, despite rumors to the contrary, the majority of financial advisors are sole practitioners, with more than 54 percent not being associated with a team. However the teaming trend continues; 31 percent of solo advisors expressed interest in either joining or forming a team within the next 12 months.

That said, solo advisors should think twice before joining or forming a team. Why? Because even though elite teams lead the field by a wide margin in every category we measured, solo advisors topped the general population of teams on a number of key metrics. Three simple metrics were used to distinguish an elite team: client retention, client acquisition, and being in the forming stage of team development (based on Dr. Bruce Tuckman's teams model). Let's take a quick look at two of these metrics because they also relate to solo advisors: retention and acquisition.

It's not a surprise that elite teams are leading the field in client loyalty, but the size of the lead got our attention. Our research indicates that 71 percent of elite advisors lost zero clients last year, compared to 37 percent of solo advisors and 26 percent of the general team population. With solo advisors outperforming the general population of teams in a significant way, it appears that advisors on teams, unless the team is elite, aren't servicing their clients as well as solo advisors. Yes, credit needs to be given where credit is due, and client retention has improved since 2009 when only 19 percent of teams lost zero clients. However, it is apparent that there is a significant difference between just being on a team and being part of an elite team when it comes to client loyalty. Meanwhile, these figures should not be viewed in isolation as they are directly linked to affluent client acquisition.

Regarding client acquisition and new assets, elite team advisors easily surpassed their counterparts, whether solo advisors or the general team population:

Average New Assets Past 12 Months

  • All Advisors: $5.92 million
  • Solo Advisors: $5.04 million
  • Team Advisors: $6.98 million
  • Elite Team Advisors: $14.3 million

Our respondents told us that the major reason advisors formed or joined a team was to accelerate their growth. Yet it is apparent that only advisors who worked to develop an elite team have achieved this result. Solo advisors are performing nearly as well as advisors on teams in general in the new assets/client acquisition area.

When it comes to career satisfaction, there is a significant difference between elite advisors and the field; 61 percent of elites say they're “very satisfied,” compared to scores in the low 40s for the rest. Solo advisors appear to be slightly more satisfied (43 percent) than advisors on teams (40 percent).

It's always fascinating to witness the hard work associated with achieving greatness, and the innate satisfaction that is woven through the process. It's almost a Zen thing. Elite team advisors are doing a much better job than the general population of teams and solo advisors in two key areas: retaining clients and bringing in new assets, which requires work. It can be assumed that the average advisor isn't putting forth the same effort.

The bottom line is that advisors should not attempt to team unless they, as well as their future team members, are committed to putting forth the effort to develop into an elite team. It seems that when advisors put forth the effort to be part of a unit that performs at a much higher level, career satisfaction increases.

If I were Dr. Phil prescribing a treatment for advisor morale, it would be simple — commit yourself to becoming elite. Period! You'll feel better about yourself, have a better work environment, enjoy managing the relationships of your clients, and make more money.


Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients.

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